They will have to remove the new membrane and the new plywood and thoroughly inspect the old substrate to determine the best course of action before continuing. It is salvageable for sure, but to avoid future issues, it must be done correctly this time. I would also insist on a new membrane. Once they remove the rubber from the new plywood, it will have stretched and been rendered unusable.
Let me know how it turns out. It’s great that they will at least honor their warranty! But they must prepare the old roof properly prior to installing the new roof substrate and EPDM membrane.